What happens to policyholders if an Admitted Carrier goes bankrupt?

If an Admitted Carrier goes bankrupt, the state typically intervenes to protect policyholders through a guaranty fund. This fund is designed to cover claims and provide compensation to policyholders in the event of an insurance company failing. This means that policyholders are not left without support in dire situations and can receive a measure of financial recovery, which helps them remain whole in light of the carrier's bankruptcy.

This system is in place because Admitted Carriers are licensed by the state and are thus required to comply with regulations designed to safeguard policyholders. The existence of such a safety net promotes confidence in the insurance market and ensures that consumers are protected even when an insurance company faces financial difficulties. Therefore, the correct answer highlights the role of state intervention in safeguarding the interests of individuals who have insurance policies with a bankrupt Admitted Carrier.